VAT Ruling No. 043-01

July 9, 2001 VAT RULING NO. 043-01 109 (d) 064-97 San Miguel (Iloilo) Livestock's Farm, Inc . P.O. Box No. 597 Manila Attention: Mr. Ramon T . Nagallo III Import Representative Gentlemen : This refers to your letter dated October 16, 2000 which was forwarded to this Office by the Regional Director, Revenue Region No. 5, Valenzuela City, requesting that your importation of 1,100 metric tons Tapioca Hard Pellets under Bill of Lading No. PP-02 on board the vessel M/V "Golden Valley" be exempted from the value-added tax and that the tax payments made on the said importation be refunded. In support of your request, you submitted copies of the following: 1. Certification from the Bureau of Animal Industry (BAI) that San Miguel (Iloilo) Livestock's Farm, Inc. is duly registered as Feeds/Feeds Importer with Registration Certificate No. IM-510; 2. Certification dated April 17, 1997, also from BAI that the imported Tapioca Pellets from Thailand are Feed Ingredients intended for trading purposes; 3. Import Permit from the Department of Agriculture; 4. VAT payment in the amount of P393,369 under BOC Receipt No. 64073715 dated April 25, 1997; 5. Other pertinent papers. In reply, please be informed that then Section 103 (d) of the Tax Code, as amended (now Section 109 (d) of the Tax Code of 1997), provides that the " sale or importation of fertilizers; seeds, seedlings and fingerlings; fish, prawn, livestock and poultry feeds, including ingredients, whether locally produced or imported, used in the manufacture of finished feeds (except specialty feeds for race horses, fighting cocks, aquarium fish, zoo animals and other animals generally considered as pets )" shall be exempt from the value-added tax (VAT). The foregoing provision refers to three (3) transactions as being exempted from VAT, namely: 1. Sale or importation of fertilizers, seeds, seedlings and fingerlings; 2. Sale or importation of fish, prawn, livestock and poultry feeds; and 3. Sale or importation of feed ingredients used in the manufacture of finished feeds (fish, prawn, livestock and poultry feeds) except specialty feeds. It is significant to note that since the manufacture, importation, sale or distribution of feeds or feeding stuff require prior registration and prior permit from the Bureau of Animal Industry (BAI) under Republic Act No. 1556, as amended by Presidential Decree No. 7, the certification on the nature and composition of the commodities/items as stated in the registration and import permit issued by BAI will govern the classification of the said items for purposes of VAT exemption under then Sec. 103 (d) of the Tax Code, as amended (now Section 109(d) of the Tax Code of 1997). (BIR Ruling No. 028-98 dated September 15, 1998). It is likewise worthy to state that this Office has previously ruled that the importation of Tapioca Pellets is exempt from the value-added tax (VAT Ruling No. 064-97 dated October 17, 1997). But, while the importation of Tapioca Hard Pellets, which is certified as "feed ingredient" by the BAI is exempt from VAT, your claim for the refund of the amount of P393,369.00 representing 10% VAT paid on the said importation cannot be granted as the claim for refund was filed out of time. Pursuant to Sec. 204(C) of the Tax Code, amended by RA 7716, as further amended by RA 8241 [also Sec. 204(C), Tax Code of 1997], no credit or refund of taxes or penalties shall be allowed unless the taxpayer files in writing with the Commissioner a claim for credit or refund within two (2) years after the payment of the tax or penalty. Records show that you paid the aforesaid amount of P393,369.00 on April 25, 1997 under Bureau of Customs Receipt No. 64073715, but you filed your claim for refund only on October 24, 2000, clearly beyond the two year prescriptive period prescribed by law. In view thereof, it is regretted that your claim for refund of P393,369.00 is hereby denied for lack of legal basis. TcSAaH Very truly yours, Commissioner of Internal Revenue By: (SGD.) EDMUNDO P. GUEVARA Deputy Commissioner Legal and Inspection Group